The survival of the automobile industry starts with EVs

Faced with a long and uncertain road to recovery, what's in store for automakers in a post-pandemic world?
27 May 2020

New battery innovation could accelerate the roll-out of EVs, AVs. Source: Shutterstock

  • Worldwide vehicle sales are expected to drop 22 percent this year, according to IHS Markit
  • China reports increasing number of auto sales upon economic recovery
  • France unveiled an €8 billion (US$ 8.8 billion) plan to aid the automobile industry

The pandemic outbreak has indiscriminately affected businesses across the world. No industry has been left unscathed, and among the sectors receiving the largest blow is the automobile business.

IHS Markit predicted global auto sales to decrease by 22 percent this year, and that the US would experience their lowest volume of car and truck sales since 2010, as the industry recovers from the Great Recession.

With global automakers such as General Motors, Toyota, and Nissan reporting a drop in sales, along with Ford and Volkswagen warning of massive financial losses due to the pandemic, the outlook for automakers seems bleak.

There’s light at the end of the tunnel: China saw a quick rebound of car sales amid the reopening of its economy. In addition, factories and production lines are restarting their engines, gradually returning to full productivity.

China’s subsequent spike following an initial plummet in car sales could possibly be traced back to social distancing desires among those with means. People just don’t want to be around strangers on public transportation or in other vehicles: Ride-hailing and car-sharing services remain unpopular choices as an impact of the pandemic. Consumers prefer the safety of private-owned vehicles or individual vehicles for rent.

Similar surges are expected to hit other regions such as the US and the UK as automakers look forward to a post-pandemic future.

A greener post-pandemic future

Reports from Ford and Volkswagen indicate that the two are joining hands to develop electric and self-driving vehicles. The news signals a different direction the revival of the automobile industry is heading in.

Covered by news portal Bloomberg, who claim to have insider information on the matter, the site revealed that both companies recognize the need and value in sharing the costs of large investments in order to progress in developing next-gen vehicles — electric vehicles (EVs) and autonomous vehicles (AVs).

While the automobile industry may currently be distraught over the downward trend of sales and with production lines at a complete halt, collaborations like this serve to alleviate financial burdens and propel both companies to regain their health and dominance in the sector.

Commenting on the collaboration between the two legacy makers, a PwC senior partner stated:

“The transition into electric vehicles will actually be accelerated because the industry cannot afford too many alternative propulsion systems going on at the same time,” Dietmar Ostermann shared in a webinar.

The heightened interest and pursuit in EVs is closely tied to a rise in government-led initiatives to tackle climate change, especially in Europe.

In Europe, member states are committed to healing the wounds of COVID-19 with green mobility solutions on their agendas.

Talks of increased funds and investments directed to promote green vehicles like EVs are circulating across the region. A potential Europe-wide VAT exemption on EVs sales has also been discussed in order to boost the shift. 

On Tuesday, French President Emmanuel Macron announced an €8 billion (US$ 8.8 billion) plan to revive the nation’s automobile industry. The rescue plan will see subsidies for electric and hybrid vehicle buyers, along with increased funding to research emerging technologies like EVs and AVs. The hope is that this will encourage green mobility solutions to take off.

In a bid to produce 1 million green vehicles annually by 2025, the rescue plan is an example of nation-wide commitment towards fossilizing green mobility solutions and we may see even more automakers gravitating towards the development of AVs and EVs.

The partnership between Ford and Volkswagen to advance in EVs and AVs is a positive step as it resonates with the rising trends of green mobility solutions across regions and within nations.